The tracker THD (iShares) seeks to track the MSCI Thailand IMI 25/50 top 129 Thai holdings.
The index therefore is rather large but 2/3 capitalisation relies on 4 sectors : The financial sector (21% of the market), energy (17%), followed by consumer goods (11%) and industry (11%). The top 10 holdings, among which there are many banks and some industrials represent nearly half (48%) of the capitalisation of the index.
This ETF embed naturally the baht, more volatile than the international big currencies. Thailand is the second largest economy in South-East Asia (after Indonesia), with a GDP of nearly $ 400 bn for 68 million people (population comparable to France). Despite the numerous shocks received (political crises, economic, natural disasters) the Thai economy demonstrated strong resilience.
Thailand is an emerging economy, which is highly dependent on exports, accounting for more than two-thirds of GDP. Thailand, an active member of ASEAN is very open to international trade. Key customers include the United States, China and Japan. The goods exported are mainly electrical and electronic products, machinery, vehicles, rubber and plastic products. Its main suppliers are China, Japan, the United States, Malaysia and UAE. The Thai economy is strongly based on agriculture which contributes to around 11% of GDP and employs more than 40% of the active population. The country is a leading producer and exporter of rice, the other crops being rubber, sugar, corn, jute, cotton and tobacco. Fishing is also an important activity, Thailand is a major exporter of shrimp . The manufacturing sector accounts for somewhat more than 37% of GDP and is well diversified. The major industries are the Thai steel, car and electronic industries. Thailand is a central place (mainly for parts assembly) for international cars manufacturers. Electrical Components & Equipment, computers, cement production, furniture and plastic products are also important sectors. The tertiary sector, including tourism and financial services, contributes to more than 53% of GDP and employs around 40% of the population.
Thailand GDP growth was 3.5% in 2016. The Ministry of Finance forecast growth rate of 3.5% For the year 2017. The factors contributing to the growth of exports of Thailand are rising fuel prices and the devaluation of the Thai baht, which now stands at approximately 34 baht by US dollar. Commodity prices should not help in the short term, but world GDP growth, the diversification strategy of the country in the innovative sectors (biotechnology/bioenergy) as well as the plan to improve infrastructure ‘corridor’ should support growth. Finally, the good performance of China, if confirmed is also a positive factor.
THD expenses are 0.63% higher than the average of our selection, but it is frequently the case for ETF emerging countries. The fund size is 400 M $. THD joined our Active Dollar Portfolio on 6/2/17, it rose only 2.5% since.
It is also possible to invest in the Thaï index in €, via THA (Lyxor, charges 0.45% but outstanding 14 M € only).
